Sean Dennis, Managing Director,
Capitalise Business Support (CBS), Hastings
( A Community Development Finance Institution (CDFI) )
Member of the CDFA Board
&
Jim McLoughlin, Babak Sodagar, Dr Jaime Kaminski
CUBIST Research Group
(Socio- economic impact research)
The Business School , University of Brighton
Applying the SIMPLE method of impact measurement
{SIMPLE = Social Impact for Local Economies}
Project funded by CDFA Step Change
& University of Brighton, Commercial Activation Fund
Economic & Social Impact Measurement
and CDFIs- The CBS Experience
EMN & CDFA Conference, London, June 2010
Policy & Sectoral context for UK CDFIs
◦ Impact measurement as a strategic priority
CBS: A pilot project on impact measurement
◦ Brief introduction
◦ Project objectives
SIMPLE Impact Measurement Model: An Overview
Emerging Impact measures from CBS project
Future direction?
Overview of the Session
Recommendation 1: Continue public sector
support to CDFIs
Recommendation 4: The sector, led by the
CDFA, should continue to support the
development of social impact methodologies in
partnership with national social value initiatives
and to evidence the full value of its activities.
Source: GHK Report, March 2010
Enterprise CDFI
Aims & rationale:◦ Improve impact measurement
◦ Better demonstrate our impact
◦ Are we delivering our Mission Statement?
◦ Future funding & support
◦ Potential product to support the sector?
Applied SIMPLE (Social Impact for Local Economies) Model ◦ A strategic approach to impact measurement (McLoughlin et al, 2009)
CBS – Measurement Development & Embedding processes ◦ Planning & briefing on CBS context and sectoral needs◦ In-house facilitated workshops with CBS staff team by Cubist Group◦ Stakeholder engagement◦ Ongoing learning, review and amendments◦ Development of measures◦ Follow up testing of measures with key stakeholders/experts
The SIMPLE Impact Measurement Method- Applied to CBS
Scope It
Map It
Track It
Tell ItEmbed It
Embed It
The SIMPLE Model: a 5 step approach
SIMPLE = Social Impact for Local Economies
Source: McLoughlin, Kaminski, Sodagar, et al (2009)
The SIMPLE Impact Model &The quadruple bottom line (4BL) - Summary version
EMBED IT
Process change
Process change
Process change
Process change
SCOPE IT MAP IT TRACK IT TELL IT
External
Drivers
Stake
holders
Internal
Drivers
Mission/
Values
Drivers
Activities
Financial
Social
Environmental
Economic
Financial
Social
Environmental
Economic
Strategic Review
Source: McLoughlin, Kaminski, Sodagar, et al (2009)
Outputs Outcomes Metrics Impacts
Policy
Dept BIS
CDFA
(+ other CDFIs)
Local
Government
EMN
-Future
-collaboration?
SEEDA
Regional
Development
agency
Impact Experts
& Practitioners
( numerous)
CBS staff
( + 1066)
Clients/
Beneficiaries
CBS
stakeholder
GHK
NEF
REDF(USA)
CDFA &
Social Enterprise
Conferences
Ongoing refinement, testing & development- Participatory approach
MAP IT: Capitalise Business Services
Identified Social , Economic and Financial sustainability outcomes
CBS: Emerging Impact Measures – A Blended value approach
Social Financial
Economic
CBS
Measures
• Businesses created
• Businesses safeguarded
• Jobs created
• Jobs safeguarded
• Business survival rates
Turnover created (Gross/ Net)
Turnover safeguarded
Benefits Saved
Social Return on Lending
Recycling of loans
• Socio- economic profile of beneficiaries– gender, IMD, age, ethnicity, area etc
• Business skills development
• Personal development & confidence
• Social capital & connectivity
• Entrepreneurship and business acumen
• Financial inclusion
• Stories/reflections
• Sustainability ratios:
•Operating costs
•Operational Self Sufficiency
•Loan fund Self Sufficiency
• Loan portfolio performance indicators:
•Portfolio growth
•Portfolio at Risk
•Write off rates
Socio–Economic profile of clients:
◦ Loans to women ~ 40%◦ Ethnic minorities ~ over 13%◦ Under 30s ~ 16.5%◦ Over 50s ~ 18.3%◦ Unemployed ~ 25.7% (of which
long term unemployed ~ 10.3%)
CBS - Social Impacts
87.5% said they would not have started with out
our loan support
100% rated the importance of loan to starting or
sustaining their business at 7 or above. (using a
Likert scale of 1 to 10 ~ 10 being most important) :◦ 12.5% ~ 7
◦ 25% ~ 8
◦ 62.5% ~ 10
37.5% confirm support has subsequently helped
them gain other funding
75% said we helped improve their business skills to a
good or significant extent
What skills did we help them develop?
◦ 75% business planning skills.
Of these 100% confirmed this was to a good or significant
extent
◦ 62.5% financial skills.
Of these 62.5% confirmed this was to a good or significant
extent
◦ Also helped 42% improve operational skills, 28%
marketing and 14% people management
What did they say about the skills support?
‘Could call at any time for advice and it was never too
much trouble’
‘Without that knowledge, the plan had no validity. It
brings a sense of realism’
‘Provided knowledge and experience, as a woman in
business, needed to toughen up’
Confidence & Self Esteem:
◦ 100% confirmed we had positively impacted at least to some
extent with 75% to a good or significant extent
Sense of Well Being:
◦ 100% confirmed we had positively impacted at least to some
extent with 50% to a good or significant extent
Sense of control of your life:
◦ 100% confirmed we had positively impacted at least to some
extent with 75% to a good or significant extent
Aspiration and ambition:
◦ 100% confirmed we had positively impacted at least to some
extent with 75% to a good or significant extent
‘Good to know that someone believes in you. Begin to be taken seriously’
‘I was £70k in debt. Now 3 years later I have repaid that debt and grown the business’
‘If it wasn't for the help, which was a substantial gamble, none of this would have happened and I would possibly have been bankrupt.
CBS looked at the business and understood the business, which the banks did not’
‘Gave me the confidence to make decisions over changing the direction of the business’
‘I stopped being statistic – as a single parent, I was considered by some to be the lowest of the low’
◦ Businesses created ~ 169 *
◦ Jobs created ~ 214 *
◦ Jobs safeguarded ~ 65 *
◦ Start up rates ~ 70.3%
◦ Gross Turnover generated ~ £1.5m (based on sample of £206,000 loans made)
◦ * figures only relate to businesses actually funded by us, not those that have only received business advice
Economic Impacts – Summary
Drawing on GHK report (March 2010)- additionality calculations ◦ Deadweight data
◦ Displacement
◦ Multiplier
◦ Leakages
Consistent with ◦ the BIS IEF Framework
◦ HM Treasury Green Book
CBS method ◦ Delivers cumulative impact through time
◦ Nearly 100% sampling
◦ Weights can be adjusted to CDFI local conditions
◦ Includes failed loans
CBS Economic Impacts
– From Gross to Net at Organisational level
CBS
Loans
£206,500
Turnover created (Gross)
Benefits
Saved
£1,498,534
£248,000
CBS Cumulative Gross &
Net Economic Impacts
£1,258,768Turnover created (Net)
Local Community Level
Turnover created (Net)
Regional level£674,340
Note: Test data from 22 start ups by CBS
- Includes lifetime loan effects – counted as 3 yrs
- Failed loans are included
- Net figures apply the GHK Report’s Gross to Net Weightings
- Net includes deadweight, displacement & multiplier effects
- Benefits saved refers to previously unemployed + £5000 pp per yr
Data Source
Client Turnover (adjusted to GVA)
Gross Value Added
(Client )+
Value Added Activity
Benefits Saved Jobs created(Previously unemployed enabled by
CDFI interventions)
(Client enabled & attributable to CDFI)
CDFI Value Added+
CDFI records(Added value of intermediation)
Social Return on Lending (SROL)- CDFI enabled economic activity
Source: McLoughlin, Dennis, Kaminski, Sodagar(2009)
Basic Formula
Borrower
organisation
loan Yr 1 Yr 2 Yr 3 Sub
Total
Yr 1
1 job
Yr 2
2 jobs
Yr 3
2 jobs
Sub total
total
term
Overall
Total
A 10K 15K 20K 20K 55K 5K 5K 0 10K 3K 68K
B 10K 15K 20K 0 35K 5K 5K 0 10K 1K 46K
C 10K 15K 0 0 15K 5K 0 0 5K -6K 14K
Total 30K 128K
Turnover adjusted
Client GVA
A
Benefits saved
- jobs created etc
B
GVA
CBS
C
Gross
value-E( A+ B + C)
Social Return on Lending (SROL) - Example
Source: McLoughlin, Dennis, Kaminski, Sodagar(2009)
SROL: £1Loan generates £4.26 value added
£30K loans generated 128K of Gross economic value added – enabled ( despite two loans failing)
£1 of loans enables £4.26 value added (approximately) for society focused on disadvantaged groupscalculated by: 128K (value added)/30K( loan)= £4.26
- potential CDFI benchmark measureNote: Even failed loans can have net value added to society.
Sector specific Measure – assumes 0% deadweight for start ups
A Gross figure
Overstates as no displacement or % deadweight accounting
Understates: re
- no multiplier effects added
- low turnover assumed
- benefits saved per previously unemployed = £5000 pp per year
- recycling of loans not included
Main Results – showing value added
Initial
loans
Turnover
Created
Turnover
Created
Net
Multiplier
on £1 loan
recycled loans Extra Value
Added generated
through recycling
Community
level
206K £1.5m £1.26 6 103K (1st
round)
618K
6 51.5K ( 2nd
round)
309K
Regional level 206K £1.5m 675K 3.3 103K (1st
round effects)
340K
51.5K ( 2nd
round effects
170k
Loan Recycling Economic Impacts
- testing from CBS data
Based on - Estimates on recycling ratio from CBS of 50%
- Applying GHK Report Gross /net weights
- 1st & 2nd round effects
Note: need to take into account transaction costs of recycling
Recycling of £206K loan potentially generates extra turnover created ( net)
£618K ( 1st round Community level) and £340K ( 1st round regional level)
Developing Support Software - Online
questionnaire
Developing prototypes for the following
- Social Impact data capture
- Gross /Net economic impacts
Developing Support Software - Generation of
Reports
Is the CBS impact measurement method of
interest and potential benefit for the UK CDFI
sector?
Is a UK Social Performance working group
needed?
If so could this have representation on the
existing EMN Social Performance Working
Group?
CONTACT US
Sean Dennis, Managing Director,
Capitalise Business Support ( CBS), Hastings
Tel: 01424 205504
E Mail: [email protected]
&
Jim McLoughlin, CUBIST Research & Consultancy Group,
The Business School , University of Brighton
Tel: + 44 (0)1273 642573
E Mail: [email protected]
Economic & Social Impact measurement
and CDFIs
- The CBS Experience
Business
/Jobs
Impacts
Gross
Economic
Impacts
Gross to
net
adjust.
Net
Economic
Impacts
Businesses
created10 78% 8
Businesses
Safeguarded10 83% 8
Jobs created 20 26% 5
Jobs
Safeguarded40 28% 11
Using GHK Report (Mar 2010) additionality weightings
Turnover Yr 1 Yr2 Yr3 Gross
Cumul-
ative
Gross
to net
adjust.
Net
Economic
Impacts
Gross
turnover
created
300 350 400 1050 84 % 882
Turnover
Safeguarded
1000 1200 1500 3700 94 % 3478
All in £ 000s, and % based on GHK Report (2010)